Household spending across the eurozone dropped sharply during the initial weeks of the war with Iran as consumer confidence eroded, indicating that any further escalation of the conflict could once again cast a shadow over consumer spending, the European Central Bank (ECB) said in an article published Monday in its Economic Bulletin.
Eurozone consumer confidence dropped following the outbreak of the war before recovering slightly later on. Nevertheless, it remained significantly below pre-war levels, undermining an overall economic growth that has been sluggish for years.
The ECB noted that the decline in consumption in April was comparable to how households reacted to the Russian war in Ukraine in early 2022.
After nominal consumption growth averaged between 3% and 4% since mid-2024, it slowed to approximately 2.5% year-on-year in April, driven by high-income households scaling back spending on discretionary goods and services.
Reuters
